Kings Of Steel: Mako-Rabco Merger Brings Expertise Nationwide
This article is provided courtesy of MakoRabco with the permission of Mini-Storage Messenger magazine. © MiniCo Insurance Agency LLC. All Rights Reserved. It is not intended for further reproduction/distribution without the exclusive permission of MiniCo Insurance Agency LLC.
By Tammy LeRoy - A few decades ago, a handful of ambitious 20-somethings working in the light-steel construction industry had a similar vision. Though 2,400 miles apart, both groups saw promise in the fledgling self-storage industry. These startups would both grow to be top construction firms in an industry that has grown beyond the boldest predictions, with an endless demand for new facilities.
Though on opposite coasts, betting on the industry in its early days allowed both companies to carve out a niche in self-storage construction. Collectively, the two companies have been involved in the building of over 4,000 facilities. Last year, the merger of Mako Steel Inc. and Rabco Enterprises LLC propelled the vision of these founders to new limits.
With a rebranding launched on March 1, the Carlsbad, Calif.-based MakoRabco brand adopted the motto, “The edge you need” to highlight how over 75 years of combined experience, economy-of-scale pricing, and streamlined processes can benefit owners and developers nationwide.
Rabco Enterprises was founded in 1988 in Apopka, Fla., by high school friends Ron Raboud and Larry Cox. The two had previously worked for a company in the greenhouse and mini-warehouse fabrication and installation business. At 25, they split off to start their own company, operating out of a spare bedroom in Raboud’s house. Nine months later, they asked Emmett C. “Buster” Owens III, a civil engineer who had worked as director of marketing for the previous company, to join them in the new venture. He was 23 when he came on board.
Rabco now consisted of the three men and a secretary, and they had moved into an office. “We didn’t have cell phones, email, or internet back then,” Owens recalls. “We had one computer, and it was for the secretary to type letters and invoices. We did all of the estimating by hand on a sheet that we copied over and over.” One of the company’s first projects was in Lumberton, N.C., over 500 miles away. “When the client needed to meet with me, I would drive all day, meet with him the next morning, and drive home,” Owens says.
For the next 30-plus years, Rabco would continue to grow, focusing on self-storage construction in the eastern U.S. and moving its headquarters to Winter Garden, Fla. Owens later came in as an equity partner. At the time of the merger in 2021, the company boasted $58 million in annual revenue.
Mako Steel was founded in 1993 in Encinitas, Calif., by 23-year-old Mike Branon, who was joined a few months later by Caesar Wright. The two had worked together previously at a pre-engineered metal building company. The young entrepreneurs worked from Branon’s dining room table, setting their sights on the emerging self-storage industry.
In the small town of Lake Havasu City, Ariz., Mako’s first client was finding his way into boat and RV storage. “That was really the kickoff of Mako niching our business solely in the self-storage industry with boat and RV storage,” Wright says. The evolution of the remote town into a popular boating and spring break destination was a phenomenon that defies any demographic logic, he says. Nonetheless, since erecting those first four buildings on six acres, the company has built over four million square feet of storage space in Lake Havasu City.
Mako’s work in the self-storage industry expanded during the 90s, and they began to bring in additional team members. “Mostly friends and family at first,” Wright recalls. “When we hired our fourth person, Mike’s wife kicked us out of the house, so we got an office.”
As metal framing became dominant in self-storage construction, Mako expanded its geographic reach in 1995 to cover the western U.S. from Texas to the West Coast, building single-story and multistory self-storage as well as boat and RV facilities. “By 1998, we were probably a group of a dozen people as the industry was continuing to launch and grow,” Wright says. “Over 70 percent of our business was repeat/referral, and it still is.”
Mako added a drafting and engineering department in 1999. “We were doing volume in the late-90s of maybe $15 million to $17 million per year in annual revenue,” Wright says. “We continued to grow and to become a recognized name in the industry through trade shows, advertising, and the work we were doing. People wanted us to be sort of a one-stop shop.” They moved their office to Carlsbad, Calif., in 2003 and grew steadily.
As the recession hit in the mid-2000s, growth was halted not only for Mako and Rabco but for the industry nationwide. “Volume completely fell off the map,” Wright says. “We had work in the pipeline, so we really felt the downturn most from 2009 into 2012,” The company had 16 employees at the time and they were able to keep most of their tenured staff.
In Florida, Rabco was facing similar difficulties. “We lost 70 percent of our backlog during the recession,” Owens says. Projects on the books were cancelled and they had to lay off 65 percent of their staff. “It was an extremely painful time to go through,” he recalls, adding that laying off employees made him physically ill to the point that he lost 30 pounds during this time.
At Mako, Branon was ready to leave the company in 2011 to pursue new opportunities. Wright, James Bartnick, and Robert Lesko bought out Branon as equal owners, with Wright at the helm. Bartnick and Lesko each served as vice presidents of operations and continue to work in these roles at MakoRabco.
Owens became president of Rabco during this time while Cox and Raboud pursued other passions. Both companies eventually turned the corner from the recession and were on track again for consistent growth. Rabco decided to sell at this time. They prepared a pitch deck, and the company went on the market.
Then, in September 2020, the industry started to experience steel price increases that continued for 12 consecutive months. “Our prices rose around 121 percent,” Wright says. “We had maybe 250 jobs on our board nationwide, and we had to go back to our clients and let them know that the contract we have in place is no longer the right number for us to engage with.” Wright says. “That makes for some very, very difficult conversations.”
Steel price increases were followed by a shortage of supply. “A plant would suddenly shut down because six people got diagnosed with COVID-19,” Wright says. “We were put on allocation as were so many others.” Mako was challenged to meet construction schedules not only from a pricing standpoint but also from a supply standpoint. “Demand had skyrocketed but supply was short, and it was at a price we literally could only hold for 10 days,” he adds.
In October and November of 2021, steel prices finally stabilized and then came down slightly in December and January while supply problems were improving. “Then, this war got started in Ukraine,” Wright says.
Some work has been put on hold while the company waits to see what happens with steel prices over the summer. “We’re living it like everyone else is,” Wright says. “We don’t have a magic crystal ball.”
Labor shortages and higher energy prices are also affecting building costs. Despite these cost increases, coupled with higher real estate costs and rising interest rates, demand in the industry remains high. “Demand is as high as it’s ever been, which just goes to show you how strong the storage market is,” Wright says. “Throughout my career—minus the recession—it’s been almost bulletproof.”
After the recession, Wright turned his attentions once again to a long-held vision for Mako to become a leading national player in the industry. “To do that, a lot of things would have to happen as far as how our company was structured and what we would look like,” Wright says. “And we needed to do that with horsepower, financially.” In 2018, the company’s financial adviser suggested partnering with a private equity firm. They met with a broker who prepared a deck to sell a portion of the business.
“We had tremendous response from multiple private equity firms,” Wright says. “It was actually quite humbling to see all of that hard work pay off. Mako is all I really know.” Ultimately, the equity partners sold a majority percentage of the company to Larchmont, N.Y.-based New State Capital. The deal closed in August 2019 when Mako was earning $48 million in annual revenue and had built self-storage in 44 states and Mexico.
“It was scary to sell off a controlling interest because it was everything I had worked for my entire life,” Wright says. “I wanted to make sure it was the right fit for us. I didn’t want to jeopardize my staff and wanted to make sure it was someone who had the same business philosophy I had.”
Wright stayed on as CEO and the company began growing organically from within, but one of his objectives was to look for an acquisition. “We targeted Rabco as a good fit with us,” he says. “I’ve grown up with them in the industry.” He and Owens have known each other since the mid-90s.
“What I saw in Rabco was a company that had very similar philosophies,” Wright says. ”They had a good reputation for doing a job the right way, and a very similar business model.” One of the shared philosophies between the two was the commitment to take care of their employees. Like Mako, Rabco had a long tenured staff. Since the merger, Owens remains as president of the East Division with Cox in an advisory position. Raboud has stepped back from operations due to health issues.
“We have really put ourselves out there as the first national provider and installer of self-storage buildings,” Wright says. “We’re now a company that employs over 100 people and have an annual revenue around $160 million, which, for me, is scary to even think about.”
Once the merger was complete, the first task was integrating the two companies into one from a company culture perspective and from a technology standpoint. New Sate Capital brought in an integration expert to streamline the process. “This is a non-biased guy who’s just listening and mapping,” Owens says. “You’ve taken two very successful companies and had them looked at by integration experts. They’ve identified the best of both worlds and made it one.”
The integration specialist mapped the processes used by both companies from lead generation forward and created a unified process. “It will make us bigger, better, and stronger as a company,” Wright says. Becoming more efficient ultimately produces better results for clients. Owens and Cox are involved in the large-scale automation process and are working with a proprietary estimating software Cox and Raboud developed that keeps the company both competitive and within margins.
Implementing The Vision
Another big change implemented with the merger is appointing corporate officers in charge of specific aspects of the business. They’ve added a CFO, COO, CMO, and other positions. “When you’re in this private equity world, you need a C-suite to improve efficiencies,” Owens says. “Our CFO, for example, understands how we can use our size for advantageous pricing.”
Automation, high-end technology, hiring corporate officers, and other changes are expensive but essential, Owens says, to reach the higher goals set out by the private equity firm. “I don’t know if I could have imagined what it costs to do some of these things, but the return is there,” he says, adding that combining two mid-sized, privately held companies into one with $160 million in revenue requires substantial changes. “Now you’re a big corporation with a board,” he says. “You need somebody with that type of corporate experience.”
One addition to MakoRabco’s corporate suite is Inge Carr, Chief Marketing Officer. Before the rebranding, she set out to define the company’s philosophy and their commitment to clients. “It’s a new identity built around the unifying principal that connects us to one another from coast to coast,” Carr says.
The two companies’ similar values served as a guidepost to integrate and then define the new entity. “It’s wonderful to have the opportunity to redefine yourself, to highlight your strengths and lead the way in an industry where the future is bright,” says Carr.
The important shared values Carr has identified are determination, honesty, and passion. “Our pledge is that we leave every relationship, every build, better than we found it,” she says. “That’s the heart and soul of who we are as a company.” This goal will be accomplished through strengthening partnerships, delivering high-quality workmanship, and committing to on-time execution.
Technology is essential in executing this pledge. “We are staying on top of this from a build perspective and also internally,” Carr says. “There will be more communication and faster communication. Developers and owners can expect us to provide them information as they need it and when they need it.”
The company hired a communications manager who is working on a partner plan that will steer clients to other vendors that might be valuable in the building process. Sharing the company’s vast expertise and vendor connections during the entire development process is at the crux of the MakoRabco’s “The edge you need” concept. They have adopted the mantra, “We sell knowledge, and a building comes with it.” Carr says MakoRabco representatives are happy to share their expertise with developers as soon as they are even thinking about a project.
Eye On The Future
Carr notes that their future success will also be tied to the needs and wants of the storage end user. “The industry is really developing with more focus on what the customer wants to see in their storage, how they want to enter and exit their storage, and how that whole experience goes,” she says.
Owens believes growth for MakoRabco will involve offering integrated technology as part of the build. “One of the things we’re looking into is smart buildings,” he says. “You can go into any coffee shop in America and they have free Wi-Fi, but you go into a 115,000-square-foot storage facility and there is no Wi-Fi. We have access to the necessary data, product, education, etc., to be the first smart builder in the country.”
The smart building will allow storage customers to have smartphone access to everything from renting, paying bills, and buying a lock to gate access and unit access. It is also part of the vision for MakoRabco to become a premier builder of remotely managed facilities. “The premium you pay for the additional smart locks and all this stuff to go with the apps is a big money-saver as opposed to having a full-time manager,” Owens says.
The company’s goal is to stay on the leading edge of technology in self-storage, and they are investing in that. “If you’re not continuing to reinvest in your product and learn more about what’s to come in the future, then you’re not doing your job as leaders,” Owens says. “Caesar and I are working on it right now, and our private equity folks are on board.” They expect to be building unmanned facilities in the next few years.
Currently, MakoRabco has approximately $175 million in backlog with more than 270 projects on the board. “The biggest challenges will be cost of materials and rising interest rates,” he says. “But right now, money is still affordable. We’re seeing developers being very successful if they do the right due diligence.”
MakoRabco touts several benefits of the merger for developers. Being national in scope provides clients access to all of the company’s resources and expertise no matter where they are building. Newly automated systems will speed up the process and give clients the information they need at every step of the process. Another advantage to the company’s size is working with multiple suppliers and having better access to supplies during shortages and allocations. “Not only are we negotiating pricing, we also have the volume to keep everybody’s attention,” Owens says.
With much of the integration completed, there is excitement about the company’s new direction. “Who would have thought that we would go from Mike’s dining room table to where we are today?” Wright says. “It’s been a fun journey in a neat industry with so many really good people.” With no slowdown of development in sight and smart buildings on the horizon, MakoRabco’s future looks promising.
Tammy LeRoy is a freelance writer based in Indianapolis, Indiana, and is a long-time contributor to Mini-Storage Messenger.